Australia’s largest accounting software provider reveals the
business performance outlook and economic confidence of small to
medium business operators (SMEs) has fallen in the past six months.
This is particularly the case within the agriculture, forestry and
fishing sector and the wholesale and manufacturing sector.

The result comes despite the majority of respondents overall
reporting increased or stable revenue for the last financial year and
over one quarter reporting more sales/work than usual in their
short-term pipeline.

The August 2013 MYOB Business Monitor Report surveyed 1,022 SMEs one
month prior to the election, the latest survey in a series that has
run since 2004. Less than one quarter expect the domestic economy to
improve within 12 months (23%), down from 25% in the March 2013
report. The proportion expecting an improvement to take one to two
years is now 35%, down from 37%. Tellingly, the proportion who think
it will take over two years is now 26%, up from 22%.

The dip in economic confidence corresponds with a dip in revenue
expectations for this financial year. Only one quarter - 25% - are
anticipating a revenue rise, down from 30% six months ago. 22% are
expecting a fall (up from 19%), 44% are expecting revenue to be stable
(up from 42%) and 9% weren’t sure (slightly down from 10%).

The agribusiness sector stood apart as the least positive in an
economic sense, with only 13% of business operators expecting an
improvement within one year. The manufacturing and wholesale sector
was the least positive about its revenue performance for this
financial year, with 35% of operators expecting a revenue fall.

MYOB CEO Tim Reed says, “We hope to see a boost in SME confidence
now the election verdict is in, but our research suggests it will be a
slow road to significant improvement in the health of our economy and
our business outlook.

“The financial confidence of the country’s small to medium business
operators is closely linked to the health of our economy and it is
telling us a clear story. They see factors at play such as record-low
interest rates and although many welcome the upside, they recognise it
as a sure sign the domestic economy is experiencing slowed growth.

“Political uncertainty in the lead up to the election was likely a
strong influence too, with 26% of SMEs saying they didn’t trust any
political party more than the other to appropriately manage the
economy. Another likely influencing factor is operators having a more
realistic picture of their finances after financial-year end.”

On par revenue results and next quarter’s work pipeline

Overall, revenue results were on par with the March 2013 report -
two fifths of respondents reported steady revenue when asked to look
back over the past year (40%), a little more than those who saw
revenue decline (39%). The proportion who experienced a revenue rise
was unchanged from the two prior reports (18%).

Manufacturing and wholesale industry operators were hit hardest,
with 54% experiencing a revenue fall. This was closely followed by
operators in agribusiness, forestry and fishing (53%). The finance and
insurance industry was the most likely to see a rise (30%) while the
‘other industry’* category was the most likely to see steady revenue (50%).

Of the mainland states, Victoria and Western Australia were most
likely to see revenue rise (21% and 20%) followed by New South Wales
(19%). Western Australia was also the most likely to have steady
revenue (43%) and least likely to report a fall (34%). South Australia
was the most likely to see revenue fall (49%).

Over one quarter of the SMEs surveyed reported more work/sales in
their pipeline for the next three months than anticipated (28%). 43%
reported an expected pipeline, and 27% saw less work than expected.
This was on par with the March 2013 report, at 30%, 41% and 28% respectively.

Fuel prices was the top pressure point for SMEs, as it has been
since March 2011. Cash flow rose to second from fourth place, equal
with price margins and/or profitability, which rose from third place.
Attracting new customers dropped two places to fourth, while
competitive activity dropped one spot to fifth. The biggest mover of
all the 13 pressures listed was interest rates - dropping from sixth
place to ninth in this survey.

Of all the industries, operators in agriculture, forestry and
fishing felt the most pressure from fuel prices, cash flow and price
margins and/or profitability. Of the mainland states, Queenslanders
felt the most pressure from fuel prices and price margins and/or
profitability, while South Australians felt the most pressure from
cash flow.

Australian Chamber of Commerce and Industry Chief Executive Peter
Anderson agrees that many of the same pressures face businesses
regardless of sector and location, saying the Small Business. Too Big
to Ignore campaign aims to assist.

“Firstly, cut down on the red tape - we have specific examples of
where that should occur,” he says. “Secondly, simplify the tax system;
it’s a system which is actually beyond the comprehension of even
professionals in the field let alone small-business people who are
required to comply. Thirdly, make it easier to employ people. And
finally, build better infrastructure because small-business people are
part of local communities and they work inside infrastructure which
needs to be as supportive to their economic needs as it does to individuals.”

Customer-focused strategies a top priority for the third
consecutive survey

In terms of intended investment of time and/or money across various
business elements, the areas most likely to see an increase over the
next 12 months were:

Customer retention strategies – 35%

Customer
acquisition strategies – 30%

The number or variety of
products or services offered by the business – 24%

Prices
and margins on the products or services sold – 23%

Amount
paid to employees – 20%

The top three priorities have been relatively consistent since the
question was first asked in October 2011. Further down the list, the
August 2013 Business Monitor Report found sales of products/services
online drop out of the top five to seventh, while the amount paid to
employees rose one spot to fifth.

MYOB CEO Tim Reed adds, “In an increasingly digital economy, it is
disconcerting to see sales of products and services online decreasing
in priority. However, this may be because business operators feel
their current investment is just right – 61% were keeping their
investment steady over the next year and only 6% were dropping
investment back.

“Whatever the case, it pays to remember our research shows time and
time again that SMEs with a business website are much more likely to
increase their annual revenue than those who are not online. We have
recently seen a financial chasm widen between the online-savvy and
online-cautious businesses.

“Optimising the potential of an online sales environment can address
many of the pressures and priorities identified by SMEs. It not only
helps combat rising fuel prices for some, it enables all to take
advantage of the time and resource efficiencies of being searchable,
showcasing their wares and being paid via the web. More than half of
consumers are researching online prior to making a purchase so
establishing an online presence can help create new revenue streams,
attract new customers, keep customers loyal and make your business
more competitive.”

For MYOB product information, research results, business tips,
discussions, client service and more visit the MYOB Australia website,
or its The Pulse Blog, LinkedIn, Twitter, Facebook and YouTube.

About the MYOB Business Monitor

Established in 2004, the MYOB Business Monitor is a national survey
of small and medium business owners and managers, commissioned to
independent market research firm Colmar Brunton. The most recent study
ran in July and August 2013, surveying 1,022 operators from sole
traders to mid-sized companies, representing the major industry
sectors. The Monitor researches business performance and attitudes
around areas such as profitability, cash flow, pipeline work,
technology usage and government. Note: the weighting of MYOB client
and non-client respondents is reflective of overall market proportions.

About MYOB Australia

Established in 1991, MYOB is Australia's largest business management
solutions provider. It makes life easier for approx. 1.2 million
businesses across Australia and New Zealand, by simplifying
accounting, payroll, tax, practice management, CRM, websites, job
costing, inventory and more. MYOB provides ongoing support via many
client service channels including a network of over 40,000
accountants, bookkeepers and other consultants. It is committed to
ongoing innovation, particularly in cloud computing solutions, and now
spends more than AU$30 million annually on research and development.
In 2013, MYOB expanded its offerings with the acquisition of
accounting solutions provider BankLink. For more information, visit myob.com.au.